Polk Issues Common Stock to Acquire All the Assets of the Sam

question 4

Multiple Choice

Polk issues common stock to acquire all the assets of the Sam Company on January 1, 20X5. There is a contingent share agreement, which states that if the income of the Sam Division exceeds a certain level during 20X5 and 20X6, additional shares will be issued on January 1, 20X7. The impact of issuing the additional shares is to

• A)increase the price assigned to fixed assets.
• B)have no effect on asset values, but to reassign the amounts assigned to equity accounts.
• C)reduce retained earnings.
• D)record additional goodwill.

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Definitions:

Facial Hair

Hair that grows on the face, typically on areas such as the chin, cheeks, and upper lip, common in males after puberty.

Hirsutism

The growth of excessive or unwanted hair on a woman's body and face, typically following a male pattern of hair distribution.

Arterial Insufficiency

A condition resulting from the inadequate flow of blood through the arteries, often leading to tissue damage due to lack of oxygen and nutrients.

Venous Insufficiency

A condition where the veins have problems sending blood from the limbs back to the heart, often leading to swelling and varicose veins.